Asia-Pacific real estate investments up 30% in first 9 months of 2021: JLL

Oct 21, 2021

REAL estate investment volume in the Asia-Pacific region was up 30 per cent in the first 9 months of 2021, compared with the same period a year earlier, JLL said on Thursday (Oct 21).

Investors had deployed capital into more income-resilient assets in the office and logistics sectors. Direct real estate transactions year-to-date reached US$125 billion, just 6 per cent below 2019 levels.

Stuart Crow, JLL's chief executive of capital markets for Asia-Pacific, noted that the commercial real estate sector in the region remains attractive and resilient despite ongoing unpredictability.

"Throughout 2021, investor interest in the region has remained extremely high as capital becomes more active and volumes approach pre-pandemic levels across the region, which we expect will continue into the fourth quarter," he said.

For the third quarter of 2021, the investment amount was US$39.5 billion, up 10 per cent on year. However, transactions were down 23 per cent on quarter as several regional economies were hit by a resurgence of the coronavirus and subsequent restrictions limiting activity.

By sector, office investments continued to recover and made up 55 per cent of deals, supported by stabilising rents and occupancy levels.

Logistics transactions also continued to climb with investments in the past 12 months reaching US$43 billion, compared to US$25 billion in 2019. JLL expects logistics investments will grow up to US$60 billion between 2023 and 2025 amid favourable demand drivers, attractive yield spreads and a desire for diversification.

Meanwhile, retail and hotel investments have been soft due to slower economic recovery in the region amid Covid-19 outbreaks. JLL estimates hotel investment volume to cross US$7 billion for the full year of 2021, and rise to US$9 billion next year.

By geography, Australia recorded more than US$6.3 billion in direct investments for Q3 due to large industrial and office sales. Japan posted US$11.8 billion in investments while South Korea bagged US$7 billion, up 51 per cent and 1 per cent on year, respectively, amid activities from domestic real estate investment trusts and investment managers.

Meanwhile, China was down 16 per cent at US$7.3 billion, and Singapore tumbled 64 per cent to US$1.1 billion.

Regina Lim, JLL's head of capital markets research for Asia-Pacific, said: "We expect portfolio re-allocation to remain a major theme into 2022 with investors facing stiff competition for income-resilient assets including office and logistics, as well as in more niche sectors such as self-storage, residential and data centres."

She added that JLL is maintaining its view that investment volumes will rise 15 to 20 per cent in 2021, with further recovery next year.